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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI R.S. SYAL
आदेश / ORDER
PER R.S.SYAL, VP : This appeal by the assessee is directed against the order passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) Act on 21-03-2022 in relation to the assessment year 2018- 19. 2. The first issue raised by the assessee is against the denial of deduction u/s.80P(2)(a)(i) of the Act amounting to Rs.33,74,652/- on interest income from bank.
State Bank of India Employees Co-op. Credit Society Limited
Tersely stated, the facts of the case are that the assessee is a Co-operative Society which furnished its return declaring total income of Rs.93,610/-, after claiming deduction u/s.80P(2)(a)(i) of the Act in respect of interest amounting to Rs.33,74,652/-.
The Assessing Officer (AO) did not allow deduction, which view came to be countenanced in the first appeal. Aggrieved thereby, the assessee has approached the Tribunal.
I have heard the rival submissions and gone through the relevant material on record. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016) decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon’ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon’ble Delhi High Court in Mantola Cooperative Thrift Credit
State Bank of India Employees Co-op. Credit Society Limited Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon’ble High Courts took into consideration the ratio laid down in the case of Totgar’s Cooperative Sale Society Ltd. (supra). No direct judgment from the Hon’ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also.
Reliance of the CIT(A) and the ld. DR on the case of Pr.
CIT and Another Vs. Totagars Cooperative Sales Society (2017)
395 ITR 611 (Kar.) is not relevant. The issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members; accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van
State Bank of India Employees Co-op. Credit Society Limited section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon’ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When I consider the effect of this decision, it turns out that the same is not germane to case under consideration in view of the position that the primary claim of the extant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act. I, therefore, overturn the impugned order on this score and allow the deduction.
The only other surviving issue is against denial of deduction of Rs.1,82,400/- on dividend received through investment in shares of Pune District Central Coop. Bank Ltd. The AO did not allow the deduction, which view came to be affirmed in the first appeal.
I have heard the rival submissions and gone through the relevant material on record. Section 80P(2)(d) provides that deduction shall be allowed “in respect of any income by way of … dividend derived by the Cooperative Society from its investment with any other Cooperative Society”. Thus, it can be seen that the only requirement for claiming deduction u/s. State Bank of India Employees Co-op. Credit Society Limited 80P(2)(d) in respect of dividend is that it should be derived by the assessee cooperative society from its investments made with any other cooperative society. The assessee received dividend income in the instant case from another cooperative society, namely, Pune District Central Coop. Bank Ltd. Thus, the condition of section 80P(2)(d) is satisfied. I, therefore, direct to allow deduction.
In the result, the appeal is allowed. Order pronounced in the Open Court on 29th August, 2022.